C2C

Thanks guys. The sponsor is not interested in a suspension of benefits. They just want to go from not allowing in-service post NRA distributions to requiring in-service distributions for those at NRA. Although it hasn't been an "option" to delay benefit payments until actual termination, it seems like taking away the delayed payment date might violate the 411(d)(6) rules. If they do allow the participants to elect to defer payment until actual retirement, they won't provide a suspension of benefits.

I have a DB plan that only allows benefit payments to start at termination for those who continued working beyond NRD. They got the greater of AE and additional accruals. Now the accruals are frozen and the sponsor wants to amend to say the participants must start payments at NRD even if they are still working. I know they can amend to allow participant to begin payments at NRD while still working, but I'm not sure they can take away the option to defer payments (with AE increases) until actual retirement. Would that be a protected benefit that can't be removed? Thanks for any thoughts/guidance.

Thanks Effen and Pax for your responses. I will certainly be in contact with the client. I am trying to get a hold of the actuary for an explanation on the balance test and years used for the amortization period. I did find our that that the client has not informed the prior actuary yet of the change. So, I will probably just let them do 2004 and then have enough time to fight with them to get it all corrected or at least have them justify why they did what they did. Then I can do 2005 with a much clearer conscience and go the ABCD route if I have to. I believe at that point, 1-1-05, I can change the funding method altogether because the 5 years will have passed since the last change. As for the 4/5 year clock. I knew what I meant, I just didn't say it. I do understand it is 5 years. I guess I wanted to make sure I understood the change in automatic approval of funding method rules. In the good old days it seems to me if there was a change in actuaries, you could change to a new funding method. Now, I think you have to either use "essentially the same funding method" or be able to fit into one of the other automatic approvals. So, if the funding method was changed in one of the four look back years, my only choice is "essentially the same funding method" assuming I can meet the other requirements of that approval.

I have a takeover case where I need to do the 1-1-04 valuation (in a week!). The prior actuary changed the funding method and asset valuation method 1-1-2000. When the method was changed in 2000, the amortization period for the initial unfunded liability (or base due to change in funding method) was amortized over the wrong number of years. The old rule was used, 30 years minus the number of years the plan has been in effect, in stead of 10 years. Finally, the initial base did not consider the reconciliation account, so the balance test was off from day 1. So, now I am trying to figure out what to do. I can match the prior valuation using the bad amortization period, etc. I think I have the choice of using the same method knowing that parts of the calculations are wrong or changing to essentially the same method. But if I choose to change to essentially the same method and somehow correct the prior errors, I start the 4 year clock ticking again for a change in the future. I don't think I can change to another method altogether because it has been changed in one of the four preceding plan years. Is that right or do I get to ignore the four year rule because it is a takeover? Any thoughts or comments are appreciated.

Thanks guys. You are always so helpful. I appreciate all your effort on this message board. I hope I can be a helper instead of the helpee some day...

Yes, the benefits are "melting away".

We have a floor offset plan where the accruals were frozen two years ago. The ER is still making contributions to the PS plan, so the DB benefits for the many of the active participants are completely offset. The number of participants in the plan before the offset is applied is over 100. However, the number of participants with benefits after the offset is applied is less than 100. I am confident the ER doesn't have to pay PBGC premiums for these folks but what about counting them as participants on the Form 5500? I would like to have the plan be considered a small plan (under 100 participants) but I think that those folks with $0 benefits in the DB after the offset are still "retaining credited service" to the extent they were participants before the freeze date. So, they would still be considered participants for 5500 purposes. Does anyone have any thoughts, input, experience with this, etc.? Thanks!

Thank you!

When calculating the current liability for PBGC variable premium purposes (general rule), do I use all assumptions used in the valuation or just interest and mortality? I know to use the specified interest and mortality, but if I am assuming early retirement rates, turnover rates, etc., should those assumptions be used as well?